Analyst: Lack of clarity at Apple warrants ‘sell’ rating

“For all of its terrific marketing, superb products and highflying stock, there’s another side to the revival of Apple Computer that gets less airplay: Its lack of a certain type of disclosure.,” Herb Greenberg reports for MarketWatch. “With the exception of analyst Robert Renck, nobody seems to care. Renck, of the private research firm R. L. Renck & Co., may be the only analyst to rate Apple a ‘sell.’ Among the reasons: the sparse way in which it breaks out operating results of its segments. Renck, who prides himself on knowing his way around the dark alleys of financial statements, has a knack for questioning the status quo of Wall Street darlings. His earlier targets include McDonald’s, before investors realized how stale it had become, and CUC International, before it was acquired by – and became a major headache for – Cendant.”

Greenberg reports, “While not predicting a similar fate for Apple, Renck believes the company’s skimpy segment disclosure makes it a ‘have-faith, trust me’ stock. As a result, he has warned his clients, Wall Street’s bullish forecasts aren’t without risk for this simple reason: Analysts can’t get a true and complete picture of how Apple makes its money. ‘I don’t think Apple is doing anything wrong other than their penchant for secrecy,’ he says.”

“Renck goes so far as to say he believes Apple should do a separate breakout for computers, iPods, music-related products, peripherals and software and service. ‘Their business has changed and they should be doing it differently,’ he says. ‘Transparency is what everyone wants, and they don’t want to be transparent,'” Greenberg reports.

Greenberg reports, “On a recent earnings conference call, several analysts specifically asked about the iPod’s gross margin. Finance Chief Peter Oppenheimer responded to one, saying, ‘… Our competitors would just love to know what our specific gross margins are … and we just don’t want to help them.’ While that is understandable, Renck doesn’t believe it is necessarily right. ‘Without clarity,’ he argues, ‘analysts can’t forecast with any degree, other than to rely on what management says.'”

Full article here.

[Thanks to MacDailyNews Reader “Jim” for the heads up.]

MacDailyNews Take: So, Apple should risk hurting themselves by disclosing information that their competitors could use in order to appease the Wall Street charlatans, er… analysts? Because Apple has a responsibility to shareholders, if it’s legal, the company should do what they can to be as competitive as possible. What’s really crazier, Apple not breaking out separate products in product categories or rating AAPL stock a “sell” for no sound financial reason?

Advertisements:
Introducing the super-fast, blogging, podcasting, do-everything-out-of-the-box MacBook.  Starting at just $1099.
Get the new iMac with Intel Core Duo for as low as $31 A MONTH with Free shipping!
Get the MacBook Pro with Intel Core Duo for as low as $47 A MONTH with Free Shipping!
Apple’s new Mac mini. Intel Core, up to 4 times faster. Starting at just $599. Free shipping.
iPod. 15,000 songs. 25,000 photos. 150 hours of video. The new iPod. 30GB and 60GB models start at just $299. Free shipping.
Connect iPod to your television set with the iPod AV Cable. Just $19.
iPod Radio Remote. Listen to FM radio on your iPod and control everything with a convenient wired remote. Just $49.

47 Comments

  1. In other words, “If you don’t give me the info I want, I’ll hurt you by rating your stock a sell.”

    Says a lot about Robert Renck if you ask me. (You did ask me, didn’t you?)

    Wonder how many people make up the “Co.” in “R. L. Renck & Co.”. Probably like the Underle Group… me, myself and my wanker.

  2. I don’t like the new text ad links. The previous version wasn’t so bad because they were colored green and easily differentiated from actual links. These new blue ones are more confusing between what an ad and what’s a link.

    My $.02

  3. Red Herring.

    No, AAPL will never disclose more than required by NASD/SEC, etc. It’s the way of The Steve. Maybe this idiot’s unsuspecting clients should invest their money with M$FT or even ‘Creative’. They disclose lots of stuff; too bad they just don’t deliver.

    Rock on Steve!
    ” width=”19″ height=”19″ alt=”raspberry” style=”border:0;” />

  4. loki: We’ve made the new Intellitext ads the same color as regular links because we ant to get more people to click on them, which generates more revenue for us. Thanks for your understanding.

  5. This is just a attempt to con the fools into selling more stock so the price is driven lower so the smart money (who knows Apple has a boatload of new product announcements coming) to snap up the stock at a lower price.

    Nice try, anal-ist.

  6. Give Renck a break! Questioning Apple’s secrecy, he’s only doing his job. Short of the information he is looking for, he has to call it as he sees it. Or is that as Apple let’s him see it.

    In this post Enron, MCI, etc. world, corporate transparency has become very important in the financial world. Renck believes Apple should be more open about their financials. Maybe they’ll open their accounting, if more people question it.

    Before the flames about capitalists, etc., Apple Computer is a member of the S&P 500, which uyou see and hear quoted in the newspaper, on TV, etc. Many people, probably including you, have their money invested in Apple, even if indirectly through a retirement account.

    So yes, Apple openess is important.

  7. Lack of clarity?

    How hard is this?

    1. Apple will continue to make faster, better, Macs.

    2. Apple will continue to improve OS X which maintains a sizeable lead over it’s only serious competitor, Windows. However Apple is likely to encroach upon competitive hardware vendors by offering Macs with Windows pre-installed.

    3. Apple will continue to develop services for the iTunes music store.

    4. There will be new, more capable, more inspired iPod and iPod like devices.

    5. Apple will likely make moves into the home entertainment center space via the Mac Mini using Front Row, leveraging iTunes, and the Internet.

    Figuring out Apple’s direction is not rocket science.

    THEY HAVE, as is my MDN Magic Word, a PLAN.

  8. Now about those annoying new text links:

    add the following two lines to your /etc/.hosts file

    0.0.0.0 http://www.kontera.com
    0.0.0.0 kona.kontera.com

    it will require administrator privilege. See past posts on on stopping Intellitext ads for how to to modify the .hosts file.

    Or get one of the browser add-ons that do this sort of filtering, also mentioned in previous posts.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.